Whenever the topic of bankruptcy comes up, it is very common that many people would imagine someone who is extremely weak financially. And many people would think it is very embarrassing if one’s declared bankruptcy. Individual bankruptcy is no doubt a taboo subject. The process of bankruptcy is regulated by the court, which is formulated to assist and help people with massive debt in order for them to start again by clearing one’s accountability. Yes, it would definitely a roller coaster ride for those who are on the brink of bankruptcy.
First and foremost, you need to know what bankruptcy really means. Not everyone can declare bankruptcy as you are required to be legally meets certain requirements. You would need to owe a minimum of RM50,000 to your creditors before you can be declared bankrupt. Social guarantors are no longer allowed to be declared as bankrupt. The reason is because these people do not stand to benefit from a loan such as guaranteeing for a grant for educational or research purposes. Also, creditors would now need to personally serve the bankruptcy notice to their debtors. If you have already been declared bankruptcy, there is still a chance for you to be automatically discharged after three years from the date of being served the bankruptcy papers. However, bear in mind that this is only if you have managed to achieve the target contribution for your debts and have declared all your liabilities to the Malaysia Department of Insolvency.
Once you enter bankruptcy in the country, there are some limitations that you must be aware of. For example, all your assets will be seized. If your debts cannot be paid off under normal circumstances, then the Director General of Insolvency would step in and take over all of your assets that include properties and vehicles. These assets would then be resold to repay any outstanding amount. Other than resulting in your assets to be seized, you will also be prohibited to travel oversea. In another words, it does not make sense that a bankrupt individual to travel and to leave a monetary mess for others to handle and deal with. In case oversea travel is necessary and cannot be avoided, a court order or permission needs to be obtained first. You will also have limited funds, as all existing bank accounts will be frozen except one main account for crediting of your monthly income. A bankrupt individual will not be allowed to either spend or obtain credit more than RM1,000. Once declared bankrupt, your employment options will be restricted as well. For example, you may face restrictions in certain professional or licensing authorities like medical and law industries. Your trustworthy in terms of professionalism may be affected too. Besides, any bankrupt individual is not eligible to be the director of a company and own or be part of a business.
In short, the impact of declaring bankruptcy can be very overwhelming. Your finances, home and mortgage, family, job and loans can be affected drastically. Hence, prevention is definitely better than cure. Always try to stay away from falling into the blackhole of bankruptcy. In the event if bankruptcy cannot be prevented, the most important thing to remember is to never ever give up as there is always an avenue in which you can seek help.